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WILL ZELLERS SUCCEED?

The numbers reveal the daunting challenge Zellers faces in its competition with Wal-Mart.

“If you go back and look at the trends, Zellers has been pretty much flat in terms of sales for the past decade,” said David Brodie, a retail analyst at Research Capital Corp., Toronto. According to Brodie’s calculations, when Wal-Mart was getting started in Canada with its March 1994 purchase of 122 Woolco stores, the units were posting about C$113 ($86) in sales per square foot, while Zellers was averaging C$156. Wal-Mart reconfigured the Woolco stores and added new ones. Three years later, in January 1997, Wal-Mart gained the pre-eminence, with C$3.75 billion in total sales and 46.5 percent of the discount department store market, versus Zellers’ $3.4 billion and 42 percent. The gap has only widened since. For the 12 months ended Jan. 31, Wal-Mart Canada’s 215 stores posted sales of C$450 per square foot, three times the C$154 per square foot Zellers’ 312 stores turned in. “That’s a bit scary,” said Brodie. “Zellers obviously has its work cut out for it.”